The decision is a part of a major overhaul of the tax regime for North Sea hydrocarbon reserves. He said the cut was needed because of low global oil prices.

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The new tax breaks have been welcomed by the industry. But they suggest that the UK government is not yet in the mood to adopt financial incentives to curb exploitation of fossil fuel reserves. This is despite promises made earlier this week to tighten laws to deliver zero carbon emissions later this century — a commitment required under the Paris climate deal. “The question is not whether but how we do it,” said energy minister Andrea Leadsom on Monday.

In recent months UK ministers have disappointed climate groups by scrapping plans to fund innovative carbon capture and storage technology, which would store emissions underground. And plans for a new nuclear power station at Hinkley Point have yet to get off the ground.

Osborne offered some hope to green energy by maintaining current level of support for offshore wind farms. “But there is nothing new for onshore wind, biomass and solar, or indeed for measures to cut energy waste,” said Richard Black of the Energy and Climate Intelligence Unit, a UK-based think tank. “It is not evident that [Osborne] has internalised the implications of the recent Paris climate summit.”

Matthew Spencer, director of Green Alliance, a coalition of NGOs, said the budget “is another example of the government being strong on climate targets and weak on driving the necessary investment”.

“The chancellor spoke at length about this being a budget for the next generation,” said David Nussbaum, chief executive of WWF UK. “But there are few greater threats to the security and prosperity of our children and grandchildren than climate change, something he singularly failed to address.”

On the plus side, the budget provides £50 million for research into better energy storage technology. Osborne also put more money into flood defences that are needed, in part, to deal with the growing consequences of climate change.